United States District Court, C.D. Illinois, Peoria Division
E. SHADID, CHIEF UNITED STATES DISTRICT JUDGE
before the Court are the Plaintiff, Sherry Meyer's,
Memorandum in Support of the Application of a De
Novo Standard of Review (D. 24),  the Defendants,
Group Long Term Disability Plan for Employees of Edward D.
Jones & Co., L.P.'s (“the Plan”) and
Hartford Life and Accidental Insurance Company's
(“Hartford”), Response in Opposition (D. 25), and
the Plaintiff's Reply (D. 26). For the reasons set forth
below, the Plaintiff's Memorandum is DENIED. The Court
will apply an arbitrary and capricious standard in reviewing
Hartford's denial of the Plaintiff's benefits.
Plaintiff filed the instant action to obtain benefits which
she alleges were wrongfully denied to her in violation of the
Employee Retirement Income Security Act of 1974 as amended,
29 U.S.C. 1001, et seq (“ERISA”). (D.
1). She asserts that the Court should review her claim de
novo (D. 24 at pp. 4-6), while the Defendants argue it
should be reviewed under a more deferential, arbitrary and
capricious standard. (D. 25 at pp. 3-15). Central to their
disagreement is whether or not the policy at issue is subject
to an Illinois regulation prohibiting discretionary clauses
in insurance policies offered or issued in Illinois-50 Ill.
Adm. Code 2001.3. The answer to that question, in turn,
determines the applicable standard of review.
ERISA's enforcement provision, 29 U.S.C. §
1132(a)(1)(B), a denial of benefits challenge is reviewed
under a de novo standard unless the benefit plan
gives the administrator or fiduciary discretionary authority.
Firestone Tire & Rubber Company v. Bruch, 489
U.S. 101, 115 (1989). If the plan provides that an
administrator has discretionary authority to determine
eligibility for benefits, the Court must review the denial of
benefits under the arbitrary and capricious standard.
Mote v. Aetna Life Ins. Co., 502 F.3d 601, 606 (7th
Cir. 2007); Hackett v. Xerox Corp., 315 F.3d 771,
773 (7th Cir. 2003). Here, the policy at issue grants
Hartford “full discretion and authority to determine
eligibility for benefits and to construe and interpret all
terms and provisions of the Policy.” (D. 23-12 at pg.
24); see also Id. at pp. 14, 26. Section 2001.3,
however, provides that:
No policy, contract, certificate, endorsement, rider
application or agreement offered or issued in this State, by
a health carrier, to provide, deliver, arrange for, pay for
or reimburse any of the costs of health care services or of a
disability may contain a provision purporting to reserve
discretion to the health carrier to interpret the terms of
the contract, or to provide standards of interpretation or
review that are inconsistent with the laws of this State.
50 Ill. Admin. Code § 2001.3; 29 Ill. Reg. 10172.
Accordingly, the Court must determine whether § 2001.3
applies, rendering the discretionary clauses of the policy
underlying facts in this case are undisputed. The Plaintiff
participated in the Plan, an employee benefit welfare plan
sponsored by her employer, Edward D. Jones & Co., L.P.
(“Edward Jones”). The Plan provided her with
long-term disability benefits upon being deemed disabled. The
Plaintiff was a resident of Illinois at all relevant times.
Hartford issued an insurance policy to fund the Plan. Edward
Jones was the policyholder. (D. 23-12 at pg. 1). The
Plaintiff was insured under the policy and in a certificate
of insurance she was provided, the terms “You”
and “Your” were defined as “the person to
whom this certificate is issued.” Id. at pg.
17. An amendment to the policy shows that Hartford delivered
the policy to Edward Jones in Missouri, where it is
headquartered. Id. at pg. 31.
Plaintiff obtained coverage under the policy. At her request,
she received an insurance rider and a certificate of
insurance. (D. 23-11 at pg. 23). Hartford eventually denied a
benefit claim she submitted to them. In seeking to have this
Court review Hartford's decision, the Plaintiff argues
that their policy is subject to § 2001.3 because it was
issued to her in Illinois. (D. 24 at pp. 4-6). The Defendants
assert, inter alia, that the Plaintiff receiving a
copy of the certificate of insurance in Illinois does not
qualify as issuance under § 2001.3, and therefore the
Illinois regulation does not apply. (D. 25 at pp. 5-8).
support of their position, the Defendants cite Curtis v.
Hartford Life and Acc. Ins. Co., 2012 WL 138608 (N.D.
Ill. 2012), claiming that where the policyholder resides
determines where the policy was issued for purposes of §
2001.3. Id. at pp. 6-7. They further cite
Nasalroad v. Standard Ins. Co., 182 F.Supp.3d 879
(S.D. Ill. 2016), which relied on Curtis, in support
of their argument. Id. at pg. 7.
plaintiff in Curtis-a resident of Illinois-sought to
recover long-term disability benefits under an employee
benefit welfare plan issued to her employer-Children's
Memorial Hospital, an Illinois entity-and argued that §
2001.3 banned the policy's discretionary clause.
Curtis, 2012 WL 138608, at *2. While both parties
hailed from Illinois, the matter was complicated by the fact
that Children's Hospital became a participating member of
a Delaware trust and the insurance company later delivered an
amended policy to the trust in Delaware, naming the trust as
the policyholder. Id. at *6-7. The Court found,
however, that the policy was still offered in Illinois
because Children's Hospital negotiated it from Illinois,
the policy applied only to Children's Hospital employees
working in Illinois, and Children's Hospital paid the
premiums. Id. at *6-8. Accordingly, the court
applied the de novo standard of review. Id.
at *8. In Nasalroad, the court found that a Delaware
corporation with its principal place of business in
Pennsylvania did not offer or issue a policy in Illinois
within the meaning of § 2001.3 because “all
negotiating and decision-making regarding” the policy
“occurred outside the State of Illinois.”
Nasalroad, 182 F.Supp.3d at 881. Accordingly, the
court applied an arbitrary and capricious standard of review.
Id. This Court finds Curtis and
like the policy in Nasalroad, the policy at issue
here was issued outside of Illinois for purposes of §
2001.3. Edward Jones is headquartered in Missouri. Hartford
issued the policy to it there. While the Plaintiff retained
some benefits as an insured, as the policyholder, Edward
Jones is the insured for § 2001.3 purposes. There is
nothing in the record before the Court suggesting that any of
the negotiations or policy decisions regarding the policy at
issue occurred in Illinois. The policy was delivered to the
named policyholder outside of Illinois and Edward Jones paid
all of the premiums for the policy from Missouri. (D. 25-1 at
pp. 3-4). Given these undisputed facts, Hartford's policy
was not “offered or issued” in the State of
Illinois and § 2001.3 is not applicable.
on the foregoing, the Plaintiff's Memorandum in Support
of the Application of a De Novo Standard of Review
(D. 24) is DENIED. The Court will review Hartford's
decision to deny the Plaintiff's disability benefits
under an arbitrary and capricious standard.